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Tag Archives: Keynesian

The report from Automatic Data Processing (ADP) on Wednesday morning surprised economists once again by coming in substantially below their expectations. The 135,000 new private sector jobs created in May were way below the

Dessau, a small and steadily shrinking town in the German state of Saxony-Anhalt in what used to be East Germany, is doing the best it can. Ten years after the fall of the Berlin Wall the anticipated “miracle” enjoyed by West Germany following World War II failed to materialize for Dessau and so it is in the process of demolishing some 10,000 empty homes and

Dessau, a small and steadily shrinking town in the German state of Saxony-Anhalt in what used to be East Germany, is doing the best it can. Ten years after the fall of the Berlin Wall the anticipated “miracle” enjoyed by West Germany following World War II failed to materialize for Dessau and so it is in the process of

You would think that politicians and central bankers would learn from their mistakes, wouldn’t you? They would learn that if something doesn’t work then try something else (or try doing nothing, instead!). But no, despite warnings from Moody’s (I wrote about their downgrade of Great Britain on Monday here), which is simply a rear-view mirror of what’s already happened and their very late recognition of their faltering economy, they continue to

Leave it to my favorite establishment mouthpiece to put things into perspective: according to the Washington Post those sequester cuts starting March 1st are really going to hurt, pushing the economy into another recession (another?) and costing

Tim Huelskamp is a House member (R-Ky.) and a member of the Tea Party Caucus who was canned by Speaker John Boehner because he didn’t “toe” the Republican line, a move that Huelskamp called “petty” and “vindictive.” I called it “instructive” about Boehner.

He has strong opinions about government spending, and wasn’t afraid to voice them. Back in February of this year,

It’s hard for me to keep a civil tongue when chief alchemist Ben Bernanke makes an announcement like this. He’s going to buy more government securities in order to lower the unemployment rate, but this won’t affect the inflation rate. If it does, he’ll stop.

For the first time, the Fed has announced a goal for the unemployment rate. By saying that it anticipates that it will keep interest rates extremely low until the unemployment rate falls to 6.5% (as long as inflation doesn’t get out of control), the Fed has become more aggressive about turning the economy around.

For 20 years the Japanese economy has languished. Its stock market, once at 40,000, now is below 10,000. The solution? More of the same medicine that hasn’t worked! It’s insane. At least one intelligent soul has written about it, in The New York Times no less. He calls such policies “unusual”:

For years, proponents of aggressive monetary policy have offered this unusual piece of advice as a way to end Japan’s deflationary slump and invigorate the economy. Print lots of money, they said. Keep interest rates at zero. Convince the market that Japan will allow inflation for a while.

It hasn’t worked. For 20 years it hasn’t worked. So now, Japan’s former prime minister has a great idea:

In a speech in Tokyo on Thursday, Mr. [Shinzo] Abe said he would call for the Bank of Japan to set an inflation target of 2 to 3 percent, far above its current goal of about 1 percent, with an explicit commitment to “unlimited monetary easing” — an open-endedness that has caused jitters among some economists. The bank’s benchmark interest rate should be brought back to zero percent from 0.1 percent, Mr. Abe added.

Abe wants to do even more. He proposes that Japan’s central bank buy construction bonds to

The ongoing fight over the “fiscal cliff” may overshadow everything else as we get closer to the new year. Sadly, compromise seems hard to come by, even though the consequences of going over the cliff — hundreds of billions of dollars of spending programs that are set to expire, along with the largest tax increase since World War II for virtually all income levels — was specifically designed to force compromise.

What’s remarkable in this article is not what is said (with which I agree ) but who is saying it: Jerry Dwyer used to work at the Federal Reserve Bank of Atlanta, while James Lothian used to work at Citibank/Citicorp. These are Keynesian guys who have worked in the belly of the beast, and yet have seen the light!

The economic recovery is historically very slow:

Our current recovery has been the weakest since at least World War II. Thirty-nine months since the recovery started in June 2009, job growth has been only 2 percent. During the average recovery since 1970, job growth over the first 39 months has averaged over 8 percent. The current recovery has failed to keep up with the growth in the working age population. Unlike past recoveries, much of the drop in the unemployment rate simply reflects people giving up looking for work. And there is no doubt there was a financial crisis.

But blaming it on the financial crisis is merely political cover for the Obama administration to assume unto itself more powers and excuses to use them, all in the name of

Disasters can give an ailing construction sector a boost, while unleashing reinvestment that actually improves stricken areas and the lives of residents. Ultimately, Americans always seem to emerge stronger and rebuild better in the wake of disaster.

Happily and predictably, my friend (I don’t know him, but I know his thinking, with which I agree) Donald Boudreaux jumped onto the article with a letter to the editor pointing out the

It’s all about how you frame the question, isn’t it? The issue appears to be tax cuts for the rich: should we or shouldn’t we? By framing the question that way, discussion is limited. By re-framing the question, it changes the answers. Thanks to Investors Business Daily for pointing this out.

President Obama warned that GOP hopeful Mitt Romney’s proposed income-tax cuts will “cost” the government revenue and repeat Bush policies that he says blew up the deficit.

“The centerpiece of his economic plan are tax cuts,” Obama said at Tuesday’s presidential debate in New York. “That’s what took us from surplus to deficit.”

The mantra from the Obama camp is annoyingly repetitive and consistently wrong:

The Obama camp has strenuously opposed Romney’s pro-growth strategy, arguing that tax breaks, especially for the wealthy, “rob” programs for the middle class and poor because they don’t raise revenues and don’t “pay for themselves.”

“It has never been done before,” Vice President Joe Biden insisted in last week’s debate with Romney running-mate Paul Ryan.

But history has shown that when entrepreneurs are allowed “relief” – to keep more of what they earn – they earn more. What a surprise!

The historical tables in the back of the latest “Economic Report of the President” show that the Bush tax cuts generated more, not less, federal revenues — a phenomenon that also held true for Presidents Clinton, Reagan and Kennedy.

All four leaders, two Republicans and two Democrats, slashed taxes for top individual earners or investors. And once these rate reductions took effect and began stimulating economic activity, record individual income-tax receipts poured into the U.S. Treasury.

A great example is what happened when President Kennedy, against the advice of his Keynesian advisors, cut tax rates on

Each man insists that America’s economy can be harmed by inexpensive imports – in other words, harmed by opportunities for voluntary exchanges that lower Americans’ cost of living.

He starts with Romney:

By promising to raise taxes on Americans who buy Chinese-made goods, Mr. Romney again promised to break his campaign promise to not raise taxes. That he is unaware of the contradiction isn’t promising.

President Barack Obama confers with Federal Reserve Chairman Ben Bernanke following their meeting at the White House. (Photo credit: Wikipedia)

Graham Summers, writing for ZeroHedge, has pointed out that Fed head Ben Bernanke hasn’t done any new buying of securities despite his promise to do so back in September. The Fed publishes its balance sheet. You can see it here, in graphical form. As Summers said, if Bernanke was buying, how come the measure of money – the adjusted monetary base – is declining?

This is a mind-altering experience, reading this article. It puts my pre-existing perceptions and prejudices into disarray. When the Chinese government committed an astounding $3.5 trillion – half of the country’s gross domestic product – to stimulate the economy in 2008, it expected great things to happen: it would put people to work, counteract the Great Recession then enveloping the US, and show just how wonderful a state-controlled economy could be.

It didn’t work. Says the Journal:

Ultimately, Beijing’s stimulus fed a false investment boom that stoked asset bubbles – then the morphine [yes! the writer actually said morphine!] wore off while the government tightened.

Officials claim the economy grew at 7.6%…between April and June…Skeptics think the real number is closer to 4%. (One London research house says 1%).

Meanwhile, industries dominated or favored by the state, such as steel or solar power [No!], are idling from overcapacity. Countless sheets of copper are reportedly stacking in warehouses, blocking doorways and exemplifying Hayek’s notion of malinvestment.

Zhang somehow escaped the state indoctrination of Keynesianism and started thinking on his own. His influence has grown so remarkably, and the economic disaster enveloping China now becoming so obvious – there are now